Apple Plans To Invade The Mobile Payment Industry One Step At A Time [Report]


One day your iPhone and wallet will be one.
One day your iPhone and wallet will be one.

We’ve all been waiting with bated breath for Apple to take the mobile payment industry by storm and bring it to the mass consumer market. For years, there have been whispers that Apple is working on its own approach to reinventing mobile payments, including the possibility of a NFC-equipped iPhone. When Apple unveiled Passbook in iOS 6 last month, the company announced its first real foray into mobile payments by partnering with select companies for handling virtual goods like coupons and airline tickets.

According to a new report on The Wall Street Journal, Apple’s Passbook is only a shadow of things to come. The company is “deliberately” working on its own mobile payment system, and while the rest of its competitors scramble to test the waters, Apple is sitting back and developing the right strategy.

While Passbook in iOS 6 will collect coupons, virtual tickets and loyalty cards from partnering companies, the upcoming service does not allow the user to tie a credit/debt card directly to the app for processing mobile transactions. Services like Square use a credit or debt card to process real world transactions with participating merchants, and NFC allows smartphones like the Galaxy Nexus to make similar transactions wirelessly and with ease.

According to the Journal:

Holding back in mobile payments was a deliberate strategy, the result of deep discussion last year. Some Apple engineers argued for a more-aggressive approach that would integrate payments more directly.

But Apple executives chose the go-slow approach for now. An Apple spokeswoman declined to comment on the decision-making process.

Google and Microsoft both have their own digital payment services now, and Square has already been disrupting the industry for quite some time. Square particularly has given consumers a taste of the future with its seamless experience between customers and merchants. The problem is that Square doesn’t have Apple’s market penetration or pocketbook—not to mention iTunes, the biggest single collection of credit cards on the internet.

According to the Journal, a small group within Apple “began investigating whether the company should create a new service that would embed various payment methods into the iPhone or build a payment network of its own” last year. Brainstorming began on an ‘iWallet’ iOS app, and Passbook in iOS 6 is obviously the first fruits of that project. Apple has even considered becoming its own bank due to the complexity involved in creating an airtight mobile payment solution. Cupertino engineers have worked on implementing NFC and even a form of Bluetooth into the iPhone for mobile payments, but work have been stalled internally by the executive team while the market matures.

Apple marketing guru Phil Schiller recently said in a closed interview that digital-wallet services are “all fighting over their piece of the pie, and we [Apple] aren’t doing that,” according to the Journal. This is the classic Apple approach. Wait for everyone else to experiment and fail before sweeping in with the right product. Apple didn’t make the first smartphone, music store, or tablet. Apple innovates and redefines markets. And the mobile payment industry is in Cupertino’s sights. It’s only a matter of time.

Read the rest of The Wall Street Journal’s report for more fascinating insights into Apple’s internal approach to mobile payments.

Source: The Wall Street Journal

  • LondonFriar

    They key is whether ACH (Automated Clearing House) will support these merchant transactions. They are the ones who support most of the “slide your card now” systems in the U.S. (i.e., grocery stores, home depot, restaurants, etc.). So the main thing is if Apple has a deal going with ACH to support NFC transactions. That would require hardware upgrades at all merchant locations. In Europe, many of the merchants already have NFC readers, but only accept transaction below a certain amount. I think below £5, enough for a Starbucks. Anything above that and you have to insert your CC into the reader and enter your PIN code to allow the transaction. (Yes, almost all of the Europe has smart chip CC. Works great to eliminate fraud. Only a combination of a card reader and your PIN can authorize a transaction. 3 wrong PIN entries, and the card is INVALIDATED.)

  • likethepear

    I like that phone wallet/holder thing in the picture.


    would it not be a good idea to keep it simple, we already have iTunes accounts, could the merchants not sign up as an iTunes affiliate, when I want to buy something the merchant scans my iTunes ID off my phone charges me the amount which comes of my iTunes account and Apple charge the merchant a service charge. No new tech needed, no expensive infrastructure.

  • milospot

    Where can I get the iPhone case in this pictures? I love it.

  • ppanah

    For those who wondering about the wallet (as I did myself just a few seconds ago) here it is:

  • kafantaris2

    If you’re not there to get it started, you won’t be there when it takes off — even if you manage to put together the best stuff then. Indeed, it’s this principle that’s sustaining the iPhone and iPad now. Others have made better and cheaper devices, but Apple was there first and defined the niche.
    So the wait-and-see approach is not consistent with Apple’s own success, and it’s not consistent with the way Apple did things under Steve Jobs.
    But maybe Apple is more gun-shy from Siri than it’s letting on.

  • joehutsko

    Can you provide link to the maker of that nice leather wallet case in the photo? Searched Killian but no luck.

    Update: Kudos to ppanah for providing link, below.